By Suzanne Axtell (Technology Evangelist, O'Reilly)
Blogger, mother, foodie, and hardcore New Yorker Joanne Wilson (@TheGothamGal) is one of a few female angel investors.
Her approach to investing is unabashedly women-centric.
As she explains in the following interview, she's a believer in the power of the startup ecosystem to influence the economies of New York and beyond.
Suzanne Axtell: What inspired you to move into the venture capital (VC) space? Joanne Wilson: I call myself an angel rather than a VC because I'm doing this by myself. And I am a woman doing this by myself in this space, which I know is not the norm.
I've been involved in startup businesses throughout my whole life, and I had gotten off the train for a while. Being home with my kids, I started blogging in order to stay connected to the Internet industry and not lose my credibility. That was eight years ago.
I was closely watching all of the new companies in the space we began to call Web 2.0. One of them was Curbed, and I heard they were looking for funding. I was at a point in my life where I realized I was ready to do something, and I felt like I could add value there. So, I called Curbed founder Lockhart Steele and said I'd be very interested in funding his company. After that, the cat was out of the bag. Everyone came running in the door.
In the beginning, I was thinking of funding one, maybe two startups. But, as my husband [VC Fred Wilson] says, "Your problem is that you wouldn't want one lemonade stand; you'd want 1,000 of them."
Suzanne Axtell: What's the difference between an angel and a venture capitalist?
Joanne Wilson: There are three rounds as a company begins. The first is seed, where you have a wonderful idea and need to get things rolling. For that, you go to your family and friends. Then, as the idea gains traction — you build a website, a community, and realize you could really grow it — that's when angels like me come in. I invest in the round after seed, helping it get to the third round.
VCs are in the business of growing businesses. They bring in seasoned players with a different kind of skill set. A VC will be with a company through many iterations of investments. Angels, on the other hand, usually leave the space once the VCs get in. Angels become more of a friend and a consiglieri to the entrepreneur at that point.
Suzanne Axtell: Is an angel someone who gives as much advice as money?
Joanne Wilson: No. I'm not normal in that respect. I get really involved in these businesses. It's not like I call them, but if they want to call me every day, I am happy to answer any questions. If I don't know the answer, I'll find it out for them. I open up my Rolodex and think about the big picture. I'm pretty accessible, and I want them to reach out to me.
Suzanne Axtell: You called yourself a "chick magnet" at Web 2.0 Expo. Do you think your accessibility is one of the main reasons why women founders seek you out?
Joanne Wilson: One of the topics that I always come back to in my blog has to do with being a woman and how you can do it all, just not all at the same time, and the frustrations of balancing life and family. I think that topic resonates with a lot of women out there. I also have put the majority of my investments into women-led companies. I'm a big believer, but this whole nonsensical thing of not enough women in tech, not enough women CEOs, not enough women on the board — guess what? If we invest in women entrepreneurs, we'd change the game because they're all CEOs. It's pretty easy to do.
I also put on a conference called the Women's Entrepreneur Festival with Nancy Hechinger, a professor at NYU's Interactive Telecommunications Program. Ten businesses were started at that conference, and many connections were made. This year, we'll have about six panels, five people on each panel and a moderator for each panel, highlighting "the makers" — community makers, taste makers, art makers. What's fascinating is that only one man has signed up to come.
Suzanne Axtell: Do you have any advice for angels or VCs looking to invest in women-driven startups?
Joanne Wilson: It's no different than the advice I give to kids who graduate and want to work in a startup or be an entrepreneur. There are meetups all over the city every single night. Eventually, you meet people and hear what's going on. It's a very open, embracing industry. There's a lot out there and there are a lot of bloggers writing about what's going on and about new businesses. If you can't find women-led businesses, then you're not reading the right things and you're not looking in the right spots.
I would love to see more people who have created wealth for themselves and their families take a chunk of their change and invest in women-led companies. It would be better for the economy. And, again, better for women. By the way, it's not always about women — companies should be mixed. Women bring something to the table and so do men. It's about the best ideas.
Suzanne Axtell: Any advice for new founders?
Joanne Wilson: For first-time entrepreneurs moving forward and going up for more money, remember to use the people you have. Engage them in your business.
Second, consider how big you want to be. You don't have to be a $1 billion business. For instance, Dave McClure is doing a really cool thing: funding 500 new startups. He's giving a lot of people an opportunity to be entrepreneurs, but they won't all be $1B market cap companies. You could have a nice $4M-a-year lifestyle business in the local community, something you love to do every day. That is an amazing thing. You're making enough money to live your life and do good at the same time. Create economies, hire people, and maybe have a family. That's okay. You've got to think big picture, and you've got to think reality.
Suzanne Axtell: What are some of the notable companies you're involved with?
Joanne Wilson: There's a void in the market for businesses in the $50-$60M range, where investors exit at the second round. These are not niche businesses — $50M is significant. But, they're not $1B market caps. Many of the businesses that I'm involved in, women-led businesses, are at that level and going out for their VC round, which indicates that they're successful.
One of the biggest successes is Daily Worth, Amanda Steinberg's company. She has created tremendous traction and sells advertising at lightning speed, to the point that we don't have any inventory. She's done an amazing job. If she pivoted in one direction, she could be a huge, huge business.
Suzanne Axtell: Have social media or other technologies changed the way you make investment decisions?
Joanne Wilson: No. I invest in the entrepreneur, and then the business. I have to love what they're doing. Think about it like a house: when you buy a house, you can renovate it, but you can never change the location.
Suzanne Axtell: What do you think of some of the recent studies pointing to women-led startups tending to be more successful?
Joanne Wilson: Women say "we." Men say "I." That's both a positive and a hindrance. Women say, "What's my role here? How is this going to work for all of us? Am I doing as well as I think I should be doing?" Men don't think that way. If you ask five men and five women to be mentors, men say "Yeah, sure." Women say, "What's expected of me? How many hours do I have to put into it? Does this make sense for me?" It's different. Women run families.
Suzanne Axtell: Do you think the different vocabulary and thought process is part of what's hindering women founders from getting investments from mostly or all-male angels and VCs?
Joanne Wilson: No, I don't. I'm sure people would smack me for this, but going to back to the void in the marketplace for $50-$60M businesses, I think that many VCs invest only in businesses that they hope are life-changing — the $1B market cap.
If you look at many women-led businesses, they tend to invest in things that fill needs in their lives. The women who started ZipCar probably figured it would be great to walk outside and have a car waiting. The Apgar test and Scotchgard — these were invented by women. Fire escapes, Liquid Paper, windshield wipers, life rafts, cleaning tools for the home — all created by women. They create what they need, which, incidentally, adds up to a much bigger economy.
I would rather invest in 100 startups that will become $50M companies and will change economies, that will change communities, that will change families. The long-tail of the Internet revolution is that there are no longer companies with one president, seven vice presidents, and then all of these different levels of people underneath them. It's over.
Suzanne Axtell: Is the economy changing investment trends?
Joanne Wilson: The greatest thing about our country is that the people see what's happening before the government. There's a wave of entrepreneurialism, of returning to our communities — whether it's the local grocery store or butcher, customers are having conversations with their local shopkeepers. There's something really powerful about that. It was something we had right a long time ago, and there's nothing wrong with going back to that model.
Suzanne Axtell: Who inspires you?
Joanne Wilson: Hillary Clinton rocks. What she has done, from being the wife of the president to where she sits now — I think she's an amazing, incredibly inspirational human being. My husband inspires me. He's fantastic at what he does. We've been partners since we were 19 years old, and we've created everything together.
In general, I'm pretty inspired by the entrepreneurs that I meet every single day. I feel incredibly lucky that I get to meet people whose synapses are going so fast I can barely keep up, who think about ways to change the way we live and to change the economy that we're in now, who think about the world at large and are figuring out how to make money, and who want to get things done quickly and efficiently. To have those conversations every day is pretty damn inspiring.
This interview was edited and condensed. Photo by Pinar Ozger.
This post was originally posted on O'Reilly's blog.
About the guest blogger: Suzanne Axtel is a Technology Evangelist at O'Reilly. She oversees marketing efforts for all O’Reilly conferences. Sue is on a mission to help bring more diverse speakers and participants to our events, particularly women, people of color, and other groups traditionally underrepresented at tech events. She is interested in media, publishing, social networks, marketing, SEO, location awareness, and open source. I’m also an avid writer, crafter, knitter, reader, and pet lover. Follow her on Twitter at @SueAxtell.